Property owners and managers are concerned about surviving into the
next century. REW asked number of what they find to be their greatest
challenge today.

Jerome Belson, chairman and CEO of Jerome Belson Associates and
president of Associated Builders & Owners of Greater New York (ABO),
said, "The greatest challenge is to improve liquidity in me real
estate market, generate new resources of credit and encourage what we
believe to be massive amount of money sitting on me sidelines because of
me ineffectiveness in providing deductions for those who invest."

Belson continued, "There must be some recognition for
passivity to become proactive.'

If the government does not allow an offset of profits from other
sources against losses in real estate, Belson said, mere will be no
reason to invest in real estate when the investor can put his money in
government backed securities.

Andrew Hoffman, owner of London Terrace and other properties and an
ABO board member, said the biggest challenge is staying alive.
"Between the sawy tenants and continuing pressures from the
regulatory side, it's becoming harder and harder to keep the bottom
line alive."

As an owner of rent-regulated buildings, Hoffman is very concerned
about the Department of Housing and Community Renewal's proposal to
decrease the rent increase for improvements from 1/40 to 1/72 of the
cost. Hoffman, a third generation owner, said, "That 1/40 is one of
me last programs we can use to make an investment in me property."

Steven Weisz, president of W Development Group, owns rental housing
in Brooklyn and Manhattan and is doing what he calls me
"Redevelopment of Main Street."

The new trend in developing is the revitalization of Main Streets,
he said, adding there are plenty of Main Streets to revitalized.
"The big challenge is getting the money for small projects,"
he said.

Rent regulations are the biggest challenge in residential housing,
Weisz said, because they prevent owners from keeping up with the rising
costs of everything: From fuel, to real estate taxes to water and sewer
and maintenance.

Today, a simple plumbing problem can cost $400, Weisz noted, so a
rentcontrolled apartment bringing in $200 a month in Brooklyn
doesn't cover costs. "The greatest challenge is the cost of
everything is going way, way, way up," he said.

"That's where you breed anger between tenants and
owners," Weisz observed. "Tenants feel they are not getting
the services and me owners wish they could provide them but in terms
of economics they can't. You are forced into a situation where you
have to defer maintenance."

Charles Di Maggio, vice president Grenadier Realty Corp., said in
terms of market rate and cooperative properties, the greatest challenge
is to be able to convince the board of directors and owners that a
manager needs a reasonable fee to provide full service.

'There are too many smaller firms offering poor quality
service and sloppy management but produce low ball numbers during hard
times," Di Maggio said. "In the outer borough market it
causes managers to churn every two or three years and it's a hard
mind set to change that. Sometimes people are being penny wise and pound
foolish.'

Di Maggio said property managers 'have to work harder to bring
in quality contractors for less money. "You have to work hard for
your clients and to please the boards," he added. "The clients
are demanding more and more that the prices are nudged down. It's
hard to compete if you are trying to offer reasonable quality
management."

Commercial Questions

Robert W. Morgan assistant vice president of Metropolitan Life for
the New York Region, said the challenge as an institutional owner, in
the face of declining rents, is to improve standards to both retain
tenants and give new tenants a reason to come in and be able to make
money. "The first challenge is to improve and maintain building
standards with quality service, efficiency, and economies in delivering
those," he said.

"What's most important," Morgan continued, "is
retaining those you have and friar is why the quality of service is
becoming important." Morgan said a building develops a reputation
and the brokers are then influenced to bring new tenants. New tenants
see a stable, experienced owner in terms of talent and financial
services and not all the buildings in New York can offer that."

Paul J. Costa II, vice president of property management for
Rockefeller Center agreed what is foremost is the retention and me
attraction of new tenants. "You have to have an edge and have to be
concerned about the retention," he said

Today, Costa said, the tenants are more sophisticated and their
needs are different. "They have a demand for 24-hour services so it
isn't the 9 to 5 operation friar it once was," he said.

Managers have to anticipate the needs of the tenants before the
problems develop, Costa so at Rockefeller Center they have embarked on a
pro-active campaign to find out more about tenant needs.

"We now have property managers who are in constant touch with
the tenants," Costa explained. 'They are taken aback very
often that someone is calling to ask how things are."

In fact, Morgan Stanley completed a deal to increase its presence
at 1221 Avenue of the Americas by more than 70,000 square feet and
modified its existing leases of nearly a million square feet to become
co-terminus in 2002.

'They are certainly satisfied with the way the Rock Center is
operating," Costa said. 'We've done a lot of things to
make it a 21st Century operation.'

Containing Costs

Irving A. Spodek, comptroller of Kaled Management Corp., said his
greatest challenge is "to get a handle on operating costs and to
keep a lid them."

Since costs have been going down, he said, managers have a
challenge reflect lower costs and to pass lower maintenance to unit
owners.

Donna Hunt, a partner in Prism Management, observed that back in
the "wild 80's,' managers wanted to enhance the value of
cooperative a condominium apartments by improvi the lobby and fixtures.
Today, s said, financial constraints are proble atic and the biggest
challenge is improve and enhance the value a keep costs down to a
minimum.

Although buildings are going through sponsor defaults, the costs
of city ordinances are prohibitive, she said, and the market is not what
it us to be. Hunt said managers can't jeopardize the integrity of
the building a still must find the best way to run the property.
"The challenge is doing while being on shoe string budgets,"
she said.

COPYRIGHT 1993 Hagedorn Publication
No portion of this article can be reproduced without the express written permission from the copyright holder.